What’s the single most important phase of running a collision repair facility? Other than the negotiating process, I’d say it’s the estimating process. Why? Because your success at the negotiating process is directly affected by the accuracy of the estimate you’ve prepared.
In fact, everything in your business revolves around the estimating process. The estimate is the blueprint for the:
- repair process;
- negotiation process;
- income for your technicians;
- income, disbursements and profit for each particular job.
The accuracy of the estimate will dictate the quality of the repair and, ultimately, the final product, which will determine your company’s reputation. Thus, every segment of your business in some way is linked to the estimating process.
Though accuracy doesn’t seem to be the rule on a day-to-day basis, the more accurate your original is the better off you’ll be. Unfortunately, some businesses today have taken the opposite approach: Write only what you can see — sometimes with only one eye open and your glasses off — and then go from there. The only thing this game does is:
- Makes room for anyone who can run a computer program to claim he can write an estimate.
- Creates bottlenecks in the repair process.
- Creates an unnecessary amount of additional paperwork for no good reason (unless you own stock in a paper mill).
- Ultimately, adversely affects the production process and unnecessarily escalates the cost of repairs, which will inflate insurance premiums for consumers.
With that said let’s examine how to write more accurate estimates.
The Knowledge You Need
To write an accurate estimate, you must be knowledgeable in the following areas:
• Know the construction of the vehicle you’re estimating:
1. Is it a full-frame vehicle or a unibody vehicle?
2. What’s the overall strength of the vehicle?
a. Is it a strong, heavily constructed vehicle?
b. Is it an average weight vehicle with typical construction?
c. Is it a lightweight, economical vehicle?
• Find out the important details of how this vehicle was damaged:
1. Was it hit head on by a similar vehicle, a heavier vehicle or a lighter vehicle? Did this vehicle hit a stationary object or go off the road?
2. Was the vehicle you’re estimating stopped when it was impacted or was it moving? How fast were it and the other vehicle or object moving?
3. Etc., etc., etc.
• Know the repair procedures and processes this vehicle will need to go through to restore it to its pre-accident condition:
1. Does your tech need to R&I certain items in order to perform operations?
• Know the “costs” involved with the repair/refinish process. Note: “Know” your costs; don’t just be familiar with them. For example:
1. Some parts carry a smaller profit margin than others.
2. Some heavier constructed vehicles make it more difficult to pull the unibody than some lightweight constructed vehicles.
3. Some colors are more expensive than others, and some colors take more time to match than others.
• Get to know your estimating system inside and out.
1. Get as much knowledge
as possible on how the system
calculates labor time for
2. Scrutinize the system to find out how certain labor times change with the addition of other parts or procedures, and then find out why these changes occur and if they affect the tech’s labor in a positive or negative way.
If you’re still handwriting estimates, the above still applies, only the calculations are performed by you while gathering data from a book. You need to know how that data was derived and what operations are and aren’t included in the specified labor times, regardless of whether you’re handwriting or electronically generating an estimate.
• Know the P-pages in your estimating system and for all the other estimating systems you have to deal with on a daily basis. This means the insurance programs’ P-pages, as well as your competition’s. The more knowledgeable you are with the P-pages, the more understanding you’ll be with the illogical logic that dictates your profit margins and your and your technicians’ paychecks.
For example, one information provider states in bold, black letters at the front of its P-pages that labor times are to be used only as a guide and represent labor times to install new, undamaged OEM parts on new, undamaged vehicles. Have you ever estimated or repaired a new, undamaged vehicle?
Another information provider boasts that its system is the only completely automated electronic estimating system — yet you have to enter to aim the headlights, even though you may have replaced or R&I one or both headlights. You also have to enter a front-, rear- or four-wheel alignment even after replacing one or more suspension parts and enter to evacuate and re-charge an air-conditioning system after replacing an A/C condenser.
If you didn’t know these procedures were necessary on this type of front-end repair then, combined, these procedures may have cost you up to $200. And these are obvious oversights; many other procedures that aren’t included items are much more subtle, and the only way to find out what they are is to know your procedures and procedure pages for that particular estimating system.
When preparing an electronically generated P-page estimate, watch how the labor times interact as you key in additional parts and labor operations. For instance, when replacing a used front-end assembly, your tech must disassemble both the wrecked front-end and the used assembly. But will your estimating system allow for these additional operations that must be performed, or do you have to manually enter the time to perform them? Sometimes you can key in R&I used fenders, header, A/C condenser, radiator, hood, headlights, etc. However, the labor times will either show up blank or the system may deduct time from the labor to install the used front-end on the wrecked vehicle. To overcome this situation, you must manually enter the necessary time to perform these operations.
Similar situations occur when replacing a used door assembly and a used quarter-section assembly. In the case of the used door, it’s often necessary to remove the original mirror, handle and lock from the wrecked vehicle, to remove the handle, mirror and lock from the used door, and then to re-install the original handle, lock and mirror on the used door after the paint process is complete.
When replacing a used quarter assembly — which usually includes the inner and outer wheel housings, as well as a portion of the rocker panel — check the installation time to see if it’s the same as the replacement time for a new OEM quarter panel. If it is, something is wrong. You’ll need to add the appropriate labor to weld the additional parts, as well as labor to cut, fit and trim the used section.
Beware, some parts that need to be welded in or transferred from an existing damaged part and then welded onto the new part carry no labor time. Does this mean it can be done in no time? I doubt it. Times for these parts aren’t usually published and need to be derived by the estimator. If you have no idea how much time this type of operation takes, consult with a technician who’s familiar with the procedure.
• Know your market. Become familiar with your market share, your real competition in your market and the way other shops in your market write their estimates. Don’t be fooled. Just because your competition doesn’t charge for some necessary operations and procedures doesn’t mean you can’t. You’d be surprised how customers look for complete and honest estimates. You just need to make them aware of certain procedures and why they need to be performed.
• Know the consumer-protection laws in your state, as well as any governmental regulations that must be complied with (which contribute to the cost of the repair).
It all comes down to writing complete, honest estimates. Don’t fall prey to playing games; games will only create problems once you get into the repair process. They’ll also cost you time and money.
On the other hand, estimates written with integrity allow you to negotiate with integrity, increasing your chances of restoring a vehicle to its pre-loss condition or better.
My best piece of advice is this: Never underestimate the importance of estimates. Since everything in your business revolves around the estimating process, writing better estimates will produce nothing but positive effects — on your reputation, your workmanship and, ultimately, your bottom line.
Writer John Padula is president of Padula’s Body Shop, Inc., and Preferred Collision Professionals, Inc., a network of family-owned and -operated collision repair businesses.